Important Notice
Please Read Immediately
Aquilasm Group of Funds
Churchill Tax-Free Fund of Kentucky
380 Madison Avenue, Suite 2300, New York, NY 10017
Notice of Annual Meeting of
Shareholders to Be Held
on April 26, 2002
To Shareholders of the Fund:
The purpose of this Notice is to advise you that an Annual Meeting of the
Shareholders of Churchill Tax-Free Fund of Kentucky (the "Fund") will be held:
Place: (a) at the Kentucky Derby Museum;
704 Central Avenue
Louisville, Kentucky;
Time: (b) on April 26, 2002
at 10:00 a.m. local time;
Purposes: (c) for the following purposes:
(i) to elect nine Trustees; each Trustee elected will hold
office until the next annual meeting of the Fund's
shareholders or until his or her successor is duly
elected(Proposal No. 1);
(ii) to ratify (that is, to approve) or reject the selection
of KPMG LLP as the Fund's independent auditors for the
fiscal year ending December 31, 2002 (Proposal No. 2);
(iii)to act upon any other matters which may properly come
before the Meeting at the scheduled time and place or
any adjourned meeting or meetings.
Who Can
Vote What
Shares: (d) To vote at the Meeting, you must have been a
shareholder on the Fund's records at the close of
business on February 21, 2002 (the "record date").
Also, the number of shares of each of the Fund's
outstanding classes of shares that you held at that
time and the respective net asset values of each
class of shares at that time determine the number of
votes you may cast at the Meeting (or any adjourned
meeting or meetings).
By order of the Board of Trustees,
EDWARD M. W. HINES
Secretary
March 15, 2002
Please Note:
If you do not expect to attend the Meeting, please vote by any of three ways: by
telephone, by the Internet or by completing the enclosed proxy card and
returning it in the accompanying stamped envelope. To avoid unnecessary expense
to the Fund, we request your cooperation in voting no matter how large or small
your holding may be.
Churchill Tax-Free Fund of Kentucky
380 Madison Avenue, Suite 2300, New York, New York 10017
Proxy Statement
Introduction
The purpose of the Notice (the first two pages of this document) is to
advise you of the time, place and purposes of an Annual Meeting of the
Shareholders of Churchill Tax-Free Fund of Kentucky (the "Fund"). The purpose of
this Proxy Statement (all the rest of this document) is to give you information
on which you may base your decisions as to the choices, if any, you make in
voting.
The Fund's founder and Manager (the "Manager") is Aquila Management
Corporation, 380 Madison Avenue, Suite 2300, New York, NY 10017. The Fund's
principal underwriter (the "Distributor") is Aquila Distributors, Inc., 380
Madison Avenue, Suite 2300, New York, NY 10017.
A copy of the Fund's most recent annual report will be sent to you
without charge upon written request to the Distributor, at that address or by
calling 800-437-1020 toll-free or 212-697-6666.
This Notice and Proxy Statement are first being mailed on or about
March 15, 2002.
You should read this Proxy Statement prior to voting. If your shares
are registered in the name of your broker or someone other than yourself, you
may authorize that person to vote your shares. If your shares are registered in
your name, you may vote in one of three ways:
(1) Proxy Card
The enclosed proxy card authorizes the persons named (or their
substitutes) to vote your shares; the Fund calls these persons the "proxy
holders." As to the election of Trustees you may authorize the proxy holders to
vote your shares for the entire slate indicated below by marking the appropriate
box on the proxy card or by merely signing and returning your proxy card with no
instructions. Or you may withhold the authority of the proxy holders to vote on
the election of Trustees by marking the appropriate box. Also, you may withhold
that authority as to any particular nominee by following the instructions on the
proxy card.
As to the other matter listed on the proxy card, you may direct the
proxy holders to vote your shares on this proposal by marking the appropriate
box "For" or "Against" or instruct them not to vote your shares on the proposal
by marking the "Abstain" box. If you return your signed proxy card and do not
mark a box on the proposal, the proxy holders will vote your shares for that
proposal.
(2) Telephone Voting
To vote your shares by telephone, call the toll-free number on
your proxy card. You will be prompted to enter the control number on your proxy
card. Follow the recorded instructions using your proxy card as a guide. If you
vote by phone, you need not return the proxy card by mail.
(3) Internet Voting
To vote your shares by the Internet, please contact the Fund at the
Internet address shown on your proxy card. You will be prompted to enter the
control number on your proxy card. Follow the instructions on the screen, using
your proxy card as a guide. If you vote by the Internet, you need not return the
proxy card by mail.
General Information
You may end the power of the proxy holders to vote your shares by: (i)
so notifying the Fund in writing; (ii) signing a new and different proxy card
(if the Fund receives it before the old one is used); (iii) voting your shares
at the meeting in person or by your duly appointed agent; or (iv) calling the
toll free number provided above or contacting the Fund's Internet address
described above, entering your control number and revoking your previous vote.
Shares held by brokers in "street name" and not voted or marked as
abstentions will not be counted for purposes of determining a quorum or voted on
any matter or otherwise counted as present in determining voting results.
The Fund is sending you this Notice and Proxy Statement in connection
with the solicitation by its Trustees of proxies to be used at the Annual
Meeting to be held at the time and place and for the purposes indicated in the
Notice or any adjourned meeting or meetings. Whenever it is stated in this Proxy
Statement that a matter is to be acted on at the Meeting, this means the Meeting
held at the scheduled time or any adjourned meeting or meetings.
The Fund pays the costs of the solicitation. Proxies are being
solicited by the use of the mails; they may also be solicited by telephone,
facsimile and personal interviews. Brokerage firms, banks and others may be
requested to forward this Notice and Proxy Statement to beneficial owners of the
Fund's shares so that these owners may authorize the voting of their shares. The
Fund will pay these firms their out-of-pocket expenses for doing so.
On the record date, the Fund had four classes of shares outstanding.
All shareholders of the Fund are entitled to vote at the meeting. Each
shareholder on the record date is entitled to one vote for each dollar (and a
proportionate fractional vote for each fraction of a dollar) of net asset value
(determined as of the record date) represented by full and fractional shares of
any class held on the record date. On the record date, the net asset value per
share of each of the Fund's outstanding classes of shares was as follows: Class
A Shares, $10.44; Class C Shares, $10.44; Class Y Shares, $10.45 and Class I
Shares, $10.44. The meeting is expected to act only upon matters that affect the
Fund as a whole: the election of Trustees and the selection of independent
auditors. On matters that affect the Fund as a whole, all shareholders of the
Fund, including the shareholders of all classes of shares of the Fund, are
entitled to vote at the meeting.
On the record date, the total number of shares outstanding for each
class of shares was as follows: Class A Shares, 19,650,822; Class C Shares,
327,216; Class Y Shares, 2,615,676 and Class I Shares, 170,718.
On the record date, the following holders held 5% or more of the
outstanding shares of a class of Fund shares. On the basis of information
received from the institutional holders the Fund's management believes that all
of the shares indicated are held by them for the benefit of clients.
Name and address Number of shares Percent of class
of the holder of
record
Institutional 5% shareholders
SYAG
c/o Stock Yards Bank and Trust
P.O. Box 34290
Louisville, KY 1,269,347 Class A Shares 6.46%
JJB Hilliard W Lyons Inc
501 S. 4th Street
Louisville, KY 63,989 Class C Shares 19.56%
MLPF&S for the sole
benefit of its customers
4800 Deer Lake Dr East
Jacksonville, FL 47,620 Class C Shares 14.55%
Bankdan
c/o Central Kentucky Trust
218 W. Main St.
Danville, KY 881,957 Class Y Shares 33.72%
National Financial
Services LLC
200 Liberty Street
New York NY 679,166 Class Y Shares 25.97%
Monroe & Co
P.O. Box 160
Westerville, OH 202,602 Class Y Shares 7.75%
National City Bank
of Kentucky TTEE
Cardinal Aluminum Co.
P.O. Box 94894,
Cleveland, OH 250,456 Class Y Shares 9.58%
Strafe & Co
P.O. Box 160
Westerville, OH 245,212 Class Y Shares 9.37%
Danky & Co.
P.O.Box 28
Danville, KY 142,042 Class Y Shares 5.43%
Wexford Clearing Services Corp
Louisville, KY 120,357 Class I Shares 70.49%
Additional 5% shareholders
Mark A Campisano TTEE
Patricia E. Campisano rev trust
P.O. Box 34006
Louisville, KY 27,374 Class I Shares 16.03%
The Fund's management is not aware of any other person beneficially owning more
than 5% of any class of its outstanding shares as of such date.
Election of Trustees
(Proposal No. 1)
At the Meeting, nine Trustees are to be elected. Each Trustee elected
will serve until the next annual meeting or until his or her successor is duly
elected. The nominees selected by the Trustees are named in the table below. See
"Introduction" above for information as to how you can vote your shares in the
election of Trustees.
The following material includes the name, positions with the Fund,
address, date of birth and business experience during at least the past five
years of each nominee and each officer of the Fund. All shares of the Fund
listed as owned by the Trustees are Class A Shares unless indicated otherwise.
All of the nominees are presently Trustees and were elected by the shareholders
in April, 2001.
Trustees and Officers
Number of
Positions Held Portfolios in
with Fund Complex
Fund Overseen by
Name, Address(1) and Length of Principal Occupation(s) Trustee Other Directorships
and
Date of Birth Service(2) During Past 5 Years Held by Trustee
- ------------- ---------- ------------------- ---------------
Interested Trustees(3)
Lacy B. Herrmann Chairman of Founder and Chairman of the 14 Director or trustee, OCC Cash
New York, NY the Board of Board, Aquila Management Reserves, Inc., OCC
(05/12/29) Trustees since Corporation, the sponsoring Accumulation Trust,
1987 organization and Manager or Oppenheimer Quest Value Funds
Administrator and/or Adviser or Group, Oppenheimer Small Cap
Sub-Adviser to the Aquilasm Value Fund, Oppenheimer Midcap
Group of Funds (4) and Founder, Fund, and Oppenheimer
Chairman of the Board of Rochester Group of Funds.
Trustees and (currently or until
1998) President of each since
its establishment, beginning in
1984; Director of the
Distributor since 1981 and
formerly Vice President or
Secretary, 1981-1998; President
and a Director, STCM Management
Company, Inc., sponsor and
investment adviser to Capital
Cash Management Trust and
Capital Cash U.S. Government
Securities Trust, since 1973;
Trustee Emeritus, Brown
University and active in
university, school and
charitable organizations.
Diana P. Herrmann Trustee since President and Chief Operating 9 None
New York, NY 1995 and Officer of the Manager since
(02/25/58) President 1997, a Director since 1984,
since 1999 Secretary since 1986 and
previously its Executive Vice
President, Senior Vice President
or Vice President, 1986-1997;
President, Senior Vice President
or Executive Vice President of
the Aquilasm Group of Funds
since 1986; Director of the
Distributor since 1997; trustee,
Reserve Money-Market Funds,
1999-2000 and Reserve Private
Equity Series, 1998-2000; active
in mutual fund and trade
organizations and in charitable
and volunteer organizations.
Non-Interested
Trustees
Thomas A. Trustee Shareholder of Robinson, Hughes 1 None
Christopher since 1992 & Christopher, C.P.A.s, P.S.C.,
Danville, KY since 1977; President, A Good
(12/19/47) Place for Fun, Inc., a sports
facility, since 1987; active member of
the American Institute of Certified
Public Accountants.
Douglas Dean Trustee Founder and President, Dean, 1 None
Lexington, since 1987 Dorton & Ford P.S.C., a public
KY accounting firm, since 1979;
(03/21/49) active as an officer and member
of various charitable and
community organizations.
Carroll F. Knicely Trustee since President, Associated 1 Director, South Gate
Glasgow, KY 1998 Publications Inc, Glasgow, Plaza, Inc.; Knicely
(12/08/28) Kentucky; director and member, and Knicely, Inc.
Executive Board of West Kentucky
Corporation and director and
Secretary-Treasurer, South Gate Plaza,
Inc. (owner and developer of shopping
centers and commercial real estate);
director, Vice President and
Treasurer, Knicely and Knicely, Inc.
(owner and developer of rental
properties and residential real
estate); trustee, Cambellsville
University; formerly Secretary of
Commerce and Commissioner of Commerce,
Commonwealth of Kentucky.
Theodore T. Mason Trustee since Executive Director, East Wind 7 Trustee, OCC Cash
New York, NY 1992 Power Partners LTD since 1994 Reserves, Inc. and
(11/24/35) and Louisiana Power Partners, OCC Accumulation
LLC since 1999; President, Trust.
Alumni Association of SUNY
Maritime College since 2002
(First Vice President,
2000-2001, Second Vice
President, 1998-2000) and
director of the same
organization since 1997;
Director, STCM Management
Company, Inc., since 1973; twice
national officer of Naval
Reserve Association, Commanding
Officer of four naval reserve
units and Captain, USNR (Ret);
director, The Navy League of the
United States New York Council
since 2002; trustee, The
Maritime Industry Museum at Fort
Schuyler and the Maritime
College at Fort Schuyler
Foundation, Inc. since 2000.
Anne J. Mills Trustee since President, Loring Consulting 6 None
Castle Rock, CO 1987 Company since 2001; Vice
(12/23/38) President for Business Affairs,
Ottawa University, 1992-2001; IBM
Corporation, 1965-1991; Budget Review
Officer, the American Baptist
Churches/USA, 1994-1997; director, the
American Baptist Foundation since 1985
and formerly trustee, Brown
University.
William J. Nightingale Trustee since Chairman, founder (1975) and 2 Director, Ring's
Stamford, CT 1993 Senior Advisor since 1995 of End, Inc., a
(09/16/29) Nightingale & Associates, building materials
L.L.C., a general management company; Furr's
consulting firm focusing on Restaurant Group,
interim management, Inc.
divestitures, turnaround of
troubled companies, corporate
restructuring and financial
advisory services; formerly an
officer of Hanes Corporation
(women's apparel) and General
Mills, Inc. and a Senior
Associate of Booz, Allen &
Hamilton (management
consultants).
James R. Ramsey Trustee since Kentucky Governor's Senior 1 None
Frankfort, KY 1987 Policy Advisor and State Budget
(11/14/48) Director since 1999; Professor
of Economics, University of
Louisville, since 1999; Vice
Chancellor for Finance and
Administration, the University of
North Carolina at Chapel Hill, 1998 to
1999; previously Vice President for
Finance and Administration at Western
Kentucky University, State Budget
Director for the Commonwealth of
Kentucky, Chief State Economist and
Executive Director for the Office of
Financial Management and Economic
Analysis for the Commonwealth of
Kentucky, Adjunct Professor at the
University of Kentucky, Associate
Professor at Loyola University-New
Orleans and Assistant Professor at
Middle Tennessee State University.
Officers
Thomas S. Albright Senior Vice Vice President and co-manager, N/A N/A
Louisville, KY President Tax-Free Fund For Utah since
(07/26/52) since 2000 2001; Senior Vice President and
Portfolio Manager, Churchill
Tax-Free Fund of Kentucky since
July 2000; Vice President and
Portfolio Manager, Banc One
Investment Advisors, Inc.,
1994-2000.
Jerry G. McGrew Senior Vice President of the Distributor N/A N/A
New York, NY (06/18/44) President since 1998, Registered Principal
since 1994 since 1993, Senior Vice
President, 1997-1998 and Vice
President, 1993-1997; Senior
Vice President, Aquila Rocky
Mountain Equity Fund and four
Aquila Bond Funds and Vice
President, Churchill Cash
Reserves Trust, 1995-2001.
Terri M. Blair Vice President Vice President, Churchill N/A N/A
Elizabethtown, KY since 1996 Tax-Free Fund of Kentucky since
(04/05/64) 1996.
James M. McCullough Vice President Senior Vice President or Vice N/A N/A
Portland, OR (06/11/45) since 2000 President of five Aquila Bond
and Equity Funds; Senior Vice
President of the Distributor
since 2000; Director of Fixed
Income Institutional Sales, CIBC
Oppenheimer & Co. Inc., Seattle,
WA, 1995-1999.
Jason T. McGrew Vice President Vice President, Churchill N/A N/A
Elizabethtown, KY since 2001 Tax-Free Fund of Kentucky since
(08/14/71) 2001, Assistant Vice President,
2000-2001; Investment Broker with
Raymond James Financial Services
1999-2000 and with J.C. Bradford and
Company 1997-1999; Associate Broker at
Prudential Securities 1996-1997.
Rose F. Marotta Chief Chief Financial Officer of the N/A N/A
New York, NY Financial Aquilasm Group of Funds since
(05/08/24) Officer since 1991 and Treasurer, 1981-1991;
1991 Treasurer and director, STCM
Management Company, Inc., since
1974; Treasurer of the Manager
since 1984 and the Distributor,
1985-2000.
Joseph P. DiMaggio Treasurer Treasurer of the Aquilasm Group N/A N/A
New York, NY since 2000 of Funds and the Distributor
(11/06/56) since 2000; Controller, Van Eck
Global Funds, 1993-2000.
Edward M. W. Hines Secretary Partner, Hollyer Brady Smith & N/A N/A
New York, NY since 1987 Hines LLP, legal counsel to the
(12/16/39) Fund, since 1989; Secretary of
the Aquilasm Group of Funds.
Robert W. Anderson Assistant Compliance Officer of the N/A N/A
New York, NY (08/23/40) Secretary Manager since 1998 and Assistant
since 2000 Secretary of the Aquilasm Group
of Funds since 2000; Consultant, The
Wadsworth Group, 1995-1998.
John M. Herndon Assistant Assistant Secretary of the N/A N/A
New York, NY (12/17/39) Secretary Aquilasm Group of Funds since
since 1995 and Vice President of the
1995 five Aquila Money-Market Funds
since 1990; Vice President of
the Manager since 1990.
Lori A. Vindigni Assistant Assistant Treasurer of the N/A N/A
New York, NY Treasurer Aquilasm Group of Funds since
(11/02/66) since 2000 2000; Assistant Vice President
of the Manager since 1998; Fund
Accountant for the Aquilasm
Group of Funds, 1995-1998.
<FN>
(1) The mailing address of each Trustee and officer is c/o Churchill Tax-Free
Fund of Kentucky, 380 Madison Avenue, New York, NY 10017.
</FN>
<FN>
(2) Each Trustee holds office until the next annual meeting of shareholders or
until his or her successor is elected and qualifies. The term of office of each
officer is one year.
</FN>
<FN>
(3) Mr. Herrmann and Ms. Herrmann are interested persons of the Fund, as that
term is defined in the 1940 Act, as officers of the Fund and affiliates of both
the Manager and the Distributor. Each is also an interested person as a member
of the immediate family of the other.
</FN>
<FN>
(4) In this material Pacific Capital Cash Assets Trust, Pacific Capital U.S.
Government Securities Cash Assets Trust, Pacific Capital Tax-Free Cash Assets
Trust, Capital Cash Management Trust and Capital Cash U.S. Government Securities
Trust, each of which is a money-market fund, are called the "Aquila Money-Market
Funds"; Hawaiian Tax-Free Trust, Tax-Free Trust of Arizona, Tax-Free Trust of
Oregon, Tax-Free Fund of Colorado, Churchill Tax-Free Fund of Kentucky,
Narragansett Insured Tax-Free Income Fund and Tax-Free Fund For Utah, each of
which is a tax-free municipal bond fund, are called the "Aquila Bond Funds"; and
Aquila Cascadia Equity Fund and Aquila Rocky Mountain Equity Fund are called the
"Aquila Equity Funds"; considered together, these 14 funds are called the
"Aquilasm Group of Funds."
</FN>
Securities Holdings of the Trustees
(as of 12/31/01)
Dollar Range of Aggregate Dollar Range of
Name of Ownership in Churchill Ownership in Aquilasm Investment
Trustee Tax-Free Fund of Kentucky(1) Companies Overseen by Trustee(1)
- ------- ---------------- -------------------------
Interested Trustees
Lacy B. Herrmann B E
Diana P. Herrmann B D
Non-interested Trustees
Thomas A. Christopher C C
Douglas Dean D D
Carroll F. Knicely D E
Theodore T. Mason B C
Anne J. Mills C D
William J. Nightingale C C
James R. Ramsey C C
(1) A. None
B. $1-$10,000
C. $10,001-$50,000
D. $50,001-$100,000
E. over $100,000
None of the non-interested Trustees or their immediate family members
holds of record or beneficially any securities of the Manager or the
Distributor.
The Fund does not currently pay fees to any of the Fund's officers or
to Trustees affiliated with the Manager. For its fiscal year ended December 31,
2001, the Fund paid a total of $83,355 in compensation and reimbursement of
expenses to the Trustees. No other compensation or remuneration of any type,
direct or contingent, was paid by the Fund to its Trustees.
The Fund is one of the 14 funds in the Aquilasm Group of Funds, which
consist of tax-free municipal bond funds, money-market funds and equity funds.
The following table lists the compensation of all nominees for Trustee who
received compensation from the Fund or from other funds in the Aquilasm Group of
Funds during the Fund's fiscal year. None of such Trustees has any pension or
retirement benefits from the Fund or any of the other funds in the Aquila group.
Compensation Number of
from all boards on
Compensation funds in the which the
from the Aquilasm Trustee
Name Fund Group of Funds serves
Thomas A.
Christopher $7,500 $10,750 2
Douglas
Dean $7,300 $8,050 2
Carroll F.
Knicely $6,150 $7,250 2
Theodore T.
Mason $7,300 $50,250 7
Anne J.
Mills $7,300 $37,550 6
William J.
Nightingale $7,300 $14,350 2
James R.
Ramsey $8,550 $9,900 2
Class A Shares may be purchased without a sales charge by certain of
the Fund's Trustees and officers.
The Fund's Manager is Manager or Administrator to the Aquilasm Group of
Funds. As of February 28, 2002, these funds had aggregate assets of
approximately $3.5 billion, of which approximately $2.0 billion consisted of
assets of the tax-free municipal bond funds. The Manager is controlled by Mr.
Lacy B. Herrmann, through share ownership directly, through a trust and by his
wife. During the fiscal year ended December 31, 2001 the Fund paid $895,260 in
management fees.
During the fiscal year ended December 31, 2001, $300,606 was paid under
Part I of the Fund's Distribution Plan to Qualified Recipients with respect to
the Class A Shares, of which $9,112 was retained by the Distributor. With
respect to Class C shares, during the same period $19,575 was paid under Part II
of the Plan and $6,525 was paid under the Shareholder Services plan. Of these
total payments of $26,100, the Distributor received $16,485. All of such
payments were for compensation.
The Distributor currently handles the distribution of the shares of
fourteen funds (five money-market funds, seven tax-free municipal bond funds and
two equity funds), including the Fund. Under the Distribution Agreement, the
Distributor is responsible for the payment of certain printing and distribution
costs relating to prospectuses and reports as well as the costs of supplemental
sales literature, advertising and other promotional activities. The shares of
the Distributor are owned 24% by Diana P. Herrmann, 72% by Mr. Herrmann and
other members of his immediate family and the balance by current employees of
Aquila Management Corporation.
Other Information on Trustees
The Trustees have appointed a standing Audit Committee consisting of all of
the Trustees who are not "interested persons" of the Fund, as that term is
defined in the 1940 Act. The members of the Audit Committee are Thomas A.
Christopher, Douglas Dean, Carroll F. Knicely, Theodore T. Mason, Anne J. Mills,
William J. Nightingale and James R. Ramsey. None of the members of the Committee
is an "interested person" of the Fund. The Committee (i) recommends to the Board
of Trustees what firm of independent auditors will be selected by the Board of
Trustees (subject to shareholder ratification); (ii) reviews the methods, scope
and result of audits and the fees charged; and (iii) reviews the adequacy of the
Fund's internal accounting procedures and controls. The Committee held one
meeting during the Fund's last fiscal year.
During the Fund's last fiscal year, the Board of Trustees held four
meetings. Each current Trustee was present for at least 75% of the total number
of Board meetings and Audit Committee meetings (if such Trustee was a member of
that committee). The Board of Trustees does not have a nominating committee.
Since the beginning of the Fund's most recently completed fiscal year,
no Trustee purchased or sold shares of the Manager.
Ratification or Rejection of Selection of Independent Auditors
(Proposal No. 2)
KPMG LLP ("KPMG"), which is currently serving as the Fund's independent
auditors, has been selected by the Fund's Board of Trustees, including a
majority of the Independent Trustees, as the Fund's independent auditors for the
fiscal year ending December 31, 2002. Such selection is submitted to the
shareholders for ratification or rejection.
The Fund paid the following fees to KPMG during the fiscal year ended
December 31, 2001.
Audit Fees: $17,000
Financial Information
Systems Design and Implementation 0
All Other Fees $ 7,383
(Fees for preparation of the Fund's
tax returns and correspondence,
tax-equivalent yield and securities count.)
KPMG did not perform any services during the fiscal year for the Fund's
investment adviser (the "Manager") or any entity controlling, controlled by or
under common control with the Manager that provides services to the Fund.
The audit committee of the Fund's Board of Trustees, has reviewed all
services performed and fees charged by KPMG and has determined that the
provision of non-audit services reflected in the table is compatible with
maintaining KPMG's independence. The Committee has recommended to the Trustees
that KPMG be reappointed for the fiscal year ending December 31, 2002.
KPMG has no direct or indirect financial interest in the Fund or the
Manager. It is expected that representatives of KPMG will not be present at the
meeting but will be available should any matter arise requiring their presence.
Receipt of Shareholder Proposals
Under the proxy rules of the Securities and Exchange Commission,
shareholder proposals meeting tests contained in those rules may, under certain
conditions, be included in the Fund's proxy statement and proxy card for a
particular annual meeting. One of these conditions relates to the timely receipt
by the Fund of any such proposal. Under these rules, proposals submitted for
inclusion in the proxy material for the Fund's next annual meeting after the
meeting to which this Proxy Statement relates must be received by the Fund not
less than 120 days before the anniversary of the date stated in this Proxy
Statement for the first mailing of this Proxy Statement. The date for such
submission could change, depending on the scheduled date for the next annual
meeting; if so, the Fund will so advise you.
The fact that the Fund receives a shareholder proposal in a timely
manner does not insure its inclusion in the Fund's proxy material, since there
are other requirements in the proxy rules relating to such inclusion.
Other Business
The Fund does not know of any other matter which will come up for
action at the Meeting. If any other matter or matters properly come up for
action at the Meeting, including any adjournment of the Meeting, the proxy
holders will vote the shares which your proxy card, telephone or Internet vote
entitles them to vote, in accordance with their judgment on such matter or
matters, except as noted. That is, by signing and returning your proxy card or
by voting by telephone or the Internet, you give the proxy holders discretionary
authority as to any such matter or matters.
IMPORTANT NOTICE
PLEASE READ IMMEDIATELY
CHURCHILL TAX-FREE FUND OF KENTUCKY
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
to be held on APRIL 26, 2002
PROXY STATEMENT
<page>
Aquilasm Group of Funds
Churchill Tax-Free Fund of Kentucky
Proxy for Shareholders Meeting April 26, 2002 Proxy Solicited on Behalf of the
Board of Trustees
The undersigned shareholder of Churchill Tax-Free Fund of Kentucky (the
Fund) does hereby appoint LACY B. HERRMANN, DIANA P. HERRMANN and EDWARD M. W.
HINES, or any of them, as attorneys and proxies of the undersigned, with full
power of substitution, to attend the Annual Meeting of Shareholders of the Fund
to be held on Friday, April 26, 2002 at the Kentucky Derby Museum, 704 Central
Avenue, Louisville, Kentucky, at 10:00 a.m. local time, and at all adjournments
thereof, and thereat to vote the shares held in the name of the undersigned on
the record date for said meeting on the matters listed below. Such shares are
entitled to one vote for every dollar of net asset value represented by the
share balance printed below.
Please read the proxy statement prior to voting.
Annual Meeting Attendance
We encourage you to attend the Annual Meeting of Shareholders. If you can
join us, please so indicate on the proxy card or e-mail us at
info@aquilafunds.com
VOTE BY TELEPHONE OR INTERNET OR MAIL 24 Hours a day, 7 days a week
Telephone
1-800-690-6903
To vote your shares by telephone, call toll free 1-800-690-6903. You
will be prompted to enter the 12-digit control number on this proxy card. Follow
the simple recorded instructions using this proxy card as a guide. If you vote
by phone, you need not return the proxy card by mail.
Internet
www.proxyvote.com
To vote your shares by the Internet, contact the Fund at
www.proxyvote.com. You will be prompted to enter the 12-digit control number on
this proxy card. Follow the simple instructions at the website, using your proxy
card as a guide. If you vote by the Internet, you need not return the proxy card
by mail.
Mail
You can vote your shares by completing and returning this proxy card.
Please mark your proxy, date and sign it below and return it promptly in the
accompanying envelope which requires no postage if mailed in the United States.
Annual Meeting Attendance
We encourage you to attend the Annual Meeting of Shareholders. If you can
join us, please indicate it on the proxy card or e-mail us at
info@aquilafunds.com
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
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THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED
Churchill Tax-Free Fund of Kentucky
For address changes and/or comments, please check this box and write
them on the back.
[]
1. Vote on Trustees
(Proposal No.1 in Proxy Statement)
Election of Trustees
1) Lacy B. Herrmann*; 2) Thomas A. Christopher; 3) Douglas Dean; 4) Diana
P. Herrmann*; 5) Carroll F. Knicely; 6) Theodore T. Mason; 7) Anne J.
Mills; 8)William J. Nightingale; 9) James R. Ramsey
* interested Trustees
--
[__] For all
--
[__] Withhold all
--
[__] For all except
To withhold authority to vote for one or more (but not all) nominees, mark "For
all except" and write the nominee number(s) and/ or name(s) on the line below.
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[bolded in printed form]
Management recommends a vote for all nominees listed above and for the proposal
listed below. The shares represented hereby will be voted as indicated below or
For if no choice is indicated
2. Action on selection of KPMG LLP
as independent auditors (Proposal No.2 in Proxy Statement)
FOR [__] AGAINST [__] ABSTAIN [__]
As to any other matter said proxies shall vote in accordance with their best
judgment.
Please indicate if you plan to attend the Shareholder Meeting.
If you mark the box below, you must return the proxy card by mail to have this
information recorded.
I plan to attend the annual meeting in Louisville [__]
PLEASE SIGN EXACTLY AS YOUR NAME(S) APPEAR HEREON. When signing as a
custodian, attorney, executor, administrator, trustee, guardian, etc.,
please sign your full title as such. Joint owners should each sign.
_________________________________Dated: _________
Signature
[Please sign within the box]
_________________________________Dated: __________
Signature
(Joint Owners)